Building Layoff Resilience: Unleashing The Power Of Proactive Performance Management

From crisis response to strategic advantage

Over the last few years, businesses have undergone immense change. From an influx of Covid-era stimulus to the transition to remote work and back again, many leaders are now navigating how to increase employee productivity while maintaining shareholder value amidst tightening margins. Organizations are eager to find ways to strengthen their financial position, which, historically, has involved reducing headcount – en masse.

Enter performance management. 

Executives often turn to performance management during times of economic uncertainty. There are tough decisions to be made, and performance management can inform those hard calls with hopeful objectivity. The trouble with this strategy is that it lacks foresight. More importantly, it fails to consider the potential of good performance management. When implemented correctly, performance management can be a powerful tool that contributes to organizational health, builds resilience, and helps define culture. It is an additive, no matter the economic climate.

 

Overcoming Adversity: Repositioning the Perception of Performance Management

Good HR strategies are adaptive; they change as organizations change, and they reflect priorities that adjust as the economy cycles and the business environment inevitably ebbs and flows. In recent years, many organizations have back-burnered development plans, performance reviews, and structured and documented check-ins. The demand for talent far outweighed the supply, and the strategic treatment of talent reflected a fear-based culture – one where organizations were afraid to press too hard by providing feedback of any kind. Plus, there was too much work to be done. Now, as the demand for talent lessens a bit, we are left with a population of people who have had mild accountability, at best, and developmental opportunities for advancement have been made based on demand versus on documented performance and merit. 

As a result, performance management has been reduced to a series of laborious, burdensome tasks instead of the business essential that it is. In fact, HR Research Institute’s 2022-2023 Performance Management Report found that 34% of HR professionals feel their leaders view performance management as a “necessary evil,” or a waste of time. The 2020 edition of the same report found that 25% view performance management as a "necessary evil" and another 7% see it as an unnecessary waste of time – which means performance management buy-in is declining, despite all the signs of how desperately it is needed.

To overcome this perception, it is imperative that HR leaders transform their organization’s approach to performance management. We know that proactive performance management is a game-changer. We know that it is a vehicle that drives business results – and it all starts with how our workforces are measured, developed, and provided feedback. We know that, when implemented, performance management can even recession-proof a business – that is, mass layoffs are not a sign of the times but rather a sign of poor performance management. 

Proactive performance management isn’t a means to an end, it’s the beginning and the end of total workplace success, and it’s a business imperative.

Futureproofing – with Performance Management

Done right, performance management creates agility, and it’s a key indicator of organizational health and competency, as well as a sign of enlightened leadership. Not only does proactive performance management yield data-driven insights in real-time, but it also creates a framework for healthy, high-performing individuals to thrive – and unhealthy underperformers to be counseled or self-selected. As a result, proactive performance management solves problems like layoffs before human capital budgets need to be cut. 

The present-day tech industry provides a classic, albeit extreme, case study example of what performance management could do to create predictability and steady workforce metrics during economic ebbs and flows. During the pandemic, hiring in tech reached unprecedented levels. Organizations were thriving, revenue was easy to come by, and growth was pursued at all costs. It worked until it didn’t. 

Layoffs began to appear in the third and fourth quarters of 2022 and continued in higher frequency and greater volumes in 2023. Interestingly, the post-pandemic talent bloat has left many of these companies still with workforces much larger than their pre-pandemic levels. In other words, absent the spike in the middle, they’re still net positive when it comes to their total talent. The reality is if revenues and expenses are not right-sized fast enough, more layoffs will come. What if, instead of hiring and laying off in bulk, these organizations had built-in accountability metrics, clear performance indicators, and behavioral standards that were upheld and managed regardless of the state of the economy?

It would help. A lot.

Proper performance management helps connect individual performance and organizational results through aligned goals and behavioral competencies. Business objectives are translated to department- and individual-level initiatives, with clearly aligned KPIs to track and measure productivity. As a result, organizations can determine if things are going well because people are being productive or if things are going well despite employee performance. This is a vital data point that, when tracked and addressed appropriately, futureproofs an organization. 

Economic contractions are inevitable. Building organizational competency – and muscle – requires training and commitment, and the time to start is now.

Proactive Performance Management in Practice

For proactive performance management to generate results, it must start with leadership. Now that budgets are tight, it’s easy for leaders to see the value in proactive performance management programming – but it only produces ongoing relief if organizations (primarily driven by leadership) are willing to stick with it during the good times, too. 

It’s work, and admittedly it can be tedious work at times, but the effort and resources will create sustainability and holistic workforce results when performance is managed and measured. Here are the first five steps to take to get started:
 

1. Hire a subject matter expert who is committed to the performance management cause and ensure they are supported and dedicated to leading the program.
2. If you don’t have them already, partner with a consultant or tap proven and culturally-aligned high performers within the business to help craft organizational core values. These core values will serve as the foundational measuring stick with which to track healthy talent.
3. Operationalize the core values into behavioral competencies that are clearly defined. Use them to hold teams and individuals accountable in monthly 1:1 check-ins and in annual or bi-annual performance reviews.
4. Provide team members with the necessary tools, resources, and training to implement and maintain a performance management program that is highly tailored and relevant to the organization.
5. Audit for bias, relevancy, and utility on an annual basis.

Nothing worth having is ever easy to come by, including a healthy, high-performing culture.

And remember, employees want feedback. A Gallup survey found that employees who received “frequent and meaningful feedback” in the past week are four times more likely to be engaged in their work, while another Gallup study concluded that organizations with high levels of employee engagement saw an increase in productivity, profitability, and retention.

Performance management has the potential to unlock all of this. 

With a properly structured performance management program, where managers are trained and encouraged to implement and manage it correctly (including how to participate in crucial, hard conversations), team members will be able to see for themselves where they need to improve and how they can grow within the organization. Additionally, it allows leaders and HR departments to make better, data-driven decisions, regardless of the times, while simultaneously creating healthier, more resilient organizations where high performers have clear paths forward and underperformers become easier to coach up or out. 

Bulk layoffs can become a thing of the past. Performance management is the future.

Melissa Phillippi is the Vice President of Organizational Development and Talent Management at Vaco.